The 10‑year Treasury yield touched 5% on Friday, following the Fed’s 25‑basis‑point hike on September 16— a move that left the market neither rallying nor selling off.
Financial strategist Chris Wood, Global Head of Equity Strategy at Jefferies, said the 5% level remains a critical price point for global markets, even more so than the federal funds rate. He warned that a decisive break above 5% would be a negative signal for stocks.
Wood also flagged the US sanctions bill targeting buyers of Russian oil, noting it could weigh heavily on India if Washington enforces the measures. Oil prices were hovering around $106 per barrel, and Wood said that unless a deal between the US and Russia eases tensions, oil could stay high or climb further.
He pointed to China as a swing factor, noting Beijing’s recent stockpile reductions could tighten the market again if it resumes purchases to pressure the US. The only practical hedge for investors, according to Wood, is to own energy, since current oil levels still look low.
Looking ahead, Wood expects the US‑Iran standoff to stretch past the November midterms, meaning oil prices could remain elevated. Traders should monitor the 5% yield threshold closely; a breakout above it could spark a broader equity pullback.